Top 10 Business Debacles Of 2007

By Ben PopkenDecember 31, 2007

Maybe we’re just getting better at the job but it seems like the debacles this year were bigger and more scandalous than last year. Every time we turned around, there was another deadly product or breach of consumer rights or act of malfeasance. Here’s our roundup of the top 10 worst moments in business this year…

10. VerizonFiOs Setting People’s Houses On Fire

Verizon’s new fiber optic cable network is blazingly fast, but their technicians can’t be accused of the same swiftness as they keep drilling through customer’s electrical lines and gas lines, leading to small fires. In an effort to put out the PR blaze, the Verizon Policy Blog always seemed to find a way to spin each story into a tale of how wonderful and in-demand their new network is. The phrase goes, “where there’s smoke, there’s fire,” yet Verizon’s PR mavens felt they could reinvent physics and claim that the smoke at some of the incidents occurred in the absence of fire. (Link to stories)

9. Comcast Throttles Bit Torrent

Though long suspected on tech-oriented sites, the internets went into a frenzy after the AP proved that Comcast was disrupting the traffic of customers using popular file-sharing program BitTorrent, preventing its use. Though often used to trade pirated movies and music, the software is used by popular online game World of Warcraft and open-source groups to distribute new versions of their software, and in the AP’s case, the decidedly non-copyrighted Bible. Comcast denied disrupting BitTorrent traffic, but said that they reserved the right to manage their network. (Link to stories).

8. E.Coli In The Meat Kills Topps Meat Company

Late 2007 saw an extremely high number of meat shipments recalled for e.coli contamination. At Topps Meat, the recall was so massive that the company went bankrupt carrying it out. Insiders say the USDA’s ineffectuality and meatpacker-friendly loopholes have lead to higher tolerances for e.coli at plants. When the meat tests too high for e.coli, meatpackers only have to slap a “Cook Only” label on to and still get to sell it without reporting it to the USDA. Quoth Fast Food Nation, “There’s shit in the meat.” Medium-rare no longer looks so appetizing. (Link to stories).

7. Best Buy Caught Stealing Porn From Customer’s Computers

Following up on insider tip-offs of systematic porn pilfering, The Consumerist rigged a computer to make a video of itself, loaded it with porn, and it took it Best Buy. On video, we caught one of the techs purloining porn from our computer. The video went viral and Best Buy conducted a nationwide internal investigation, outsourced to ex-cops. Kids were interrogated. Kids were fired. Store hard drive were searched and seized. Pants were shat. According to some reports, most of the worst “porn caches,” communal computers where employees swapped porn, movies, music, and documents taken from customer harddrives, somehow managed to escape being hooked up for remote review. (Link to story).

6. Student Loan Scandal

Attorneys General sued and fined prominent banks and universities after uncovering widespread collusion and conflicts of interest between the two to sell college students on high-priced student loans. One of the techniques was to give students a “preferred lenders” list, which is to say, the private institutions the university preferred you to use because it meant kickbacks, gifts and expense-paid trips for them in referral rewards. While they were being shuttled into expensive private loans, the students were often not informed of the array of Federal loans that should be exhausted first. Seems some universities slept through their own Intro to Ethics classes. (Link to stories).

5. Jet Blue Passengers Stuck On The Tarmac

A winter storm swamped discount airline Jet Blue’s operating capacity, with planes grounded, passengers stuck on the tarmac for over four hours, flights canceled, call centers jammed, and thousands of passengers unable to reschedule their flights. The CEO initially won kudos for making an online video apology, but that, and his subsequent apologies upon apologies weren’t enough to save his job. The airline has developed contingency plans for future fiascoes, including new “stranding policies” for passengers, which includes paying passengers if they’re stuck inside a metal tube on a runaway for upwards of four hours and not given any food or allowed to disembark. The debacle helped galvanize a growing passenger’s rights movement and spurred pro-passenger legislation in New York, legislation which the airlines then quickly moved to scuttle. (Link to stories).

4. TJMaxx’s Largest Data Breach In History Of The Universe

Unsecured wireless systems at TJ Maxx lead to the largest data breach in the history of the universe, with millions of credit card numbers compromised. As is typical, the credit card companies and banks tried to keep everything as hush as possible and most customers only were curious as to why they and all their friends were getting their credit cards forcibly replaced. The issue highlighted how retailers have been quick to adopt the convenience of wireless information systems without taking the security measures to make sure they weren’t also conveniencing potential thieves. Who would have thought you could conduct the world’s greatest bank robbery without a note, gun, or even leaving the parking lot? (Link to stories).

3. Menu Foods Kills Pets With Fake Pet Food

Before there was lead, there was the counterfeit pet food. Menu Foods of Canada was found to be selling pet food tainted with fake protein. Swapping out the cheaper ingredients lined their and their suppliers’ pockets, and the intestinal tracts of their customer’s pets with poison, leaving dozens of pets dead. Consumers were livid. A massive recall ensued, and readers got their first glimpse into how Chinese ingredient makers get their contracts approved, only to later replace certain key ingredients with cheaper and sometimes fraudulent components, a practice that would come to be at the center of the massive lead recalls that were to come later that year. (Link to stories).

2. Mattel’s Lead-Tainted Toy Recalls

Worries about children consuming lead were largely confined to jokes about avoiding eating paint chips on old houses, until Mattel was forced to conduct the largest toy recall ever after it was found a number of their toys contained lead well above the federally allowed toxicity levels. As parents, agencies, advocacy groups, and other manufacturers began scrutinizing products and supply chains, scores more products were recalled for high levels of lead. Congressional hearings were held and the story became a staple of local and national news broadcasts. It may not be until 20 years from now that we know the true impact, when we start wondering why national IQ levels have dropped 45 points. (Link to stories).

1. Sub-Prime Mortgage Meltdown

Housing prices stopped going up and banks stopped refinancing houses, pulling out the bottom blocks of the giant Jenga tower that was the housing frenzy. In fact, it was Jenga towers upon Jenga towers, with the mortgages being carved up and reshuffled until they looked like sensible investments. Now banks are washing out billions upon billions of losses, and homeowners across the country are worried about losing their homes. Everyone in the confederacy of dunces; homeowners, loan officers, credit agencies, banks, investment firms, stand to lose. Who will get stuck holding the hot potato? (Link to stories).

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I read somewhere that Best Buy actually helped someone during a customer service call. I also heard that direct TV had one succesfull installation, and that someone was actually able to complete a call on the Sprint network. So it really wasn’t such a bad year.

Is it just me, or is JetBlue using their runway debacle as an excuse to consolidate half-full flights? I live in NYC and fly out of JFK all the time. If the sky is even vaguely cloudy, JetBlue starts canceling flights left and right. And it’s odd, because they’ll cancel one flight but leave earlier and later flights intact, regardless of the actual weather conditions at the time. A less cynical person would think they’re just trying to avoid paying the refunds to customers that they’ve promised, but I have a feeling they’re turning this to their own advantage, taking two half-full flights and turning them into one full flight.

And really, what’s more inconvenient to a customer, sitting on the runway for an hour, or having your flight canceled altogether (and not having an alternate flight available that day, which has also happened to me). Gee thanks JetBlue, instead of just annoying me, now you’re ruining my entire trip. Good job.

Hard to believe Sony’s Root Kit DRM kerfuffle isn’t up there. The impact from it, exposing customers to potential security breaches, and giving the anti-DRM camp some heavy ammunition is quite the tech story for 2007.